Contact Information Law Offices of Eric Norstedt, P. Churning refers to the excessive buying and selling of securities by a broker for the purpose of generating commissions and or fees and without regard to your investment objectives.

Unauthorized Stock Trade and Churning - Dugan Law Firm

The broker falsified fact s about an investment. If you had known the truth you would not have agreed to purchase the investment. The broker failed to inform you of facts concerning an investment. If you had known these facts you would not have agreed to purchase the investment. For example, it would be unsuitable if the client wanted safety of principal and the broker recommends a risky stock or option strategy.

A stock broker buys or sells securities for their own account before executing orders previously submitted by their customers. A broker represents that that certain securities are cash equivalents or an alternative to money markets that can be liquidated on short notice without any risk to principal.

The broker fails to inform the client that the liquidity of the market in which the securities are traded depends on the brokerage houses participating in those markets.

The broker fails to inform you that auction rate security markets have failed in the past. Brokerage houses and other financial institutions can elect not to participate in those markets thus preventing you from selling your securities. Civil Theft of Funds or Securities. The client did not ask for the check.

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The broker endorses the check upon receipt and deposits it into another account. The broker is instructed to buy or sell a security or follow a particular investment strategy.

The broker ignores the instructions and does nothing or buys something else entirely. The account has appreciated significantly. The broker fails to recommend or implement a strategy to protect the account profits.

The broker buys or sells securities without written or verbal permission. Mutual Fund Abuses including, Mutual fund churning, Mutual Fund switching, Mutual Fund Class B shares ,and Break point Selling.

These commissions give unscrupulous brokers significant incentive to sell you a fund regardless of whether it is suitable for you. Mutual funds are considered long tem investments.

Mutual Fund churning is the practice and buying and selling mutual funds for the purpose of generating a commission. Mutual Fund switching involves the replacement of a mutual fund with the same type of fund in another mutual fund family for the purpose of generating commissions.

Mutual funds typically have different share classes typically called A, B and C. Class A shares are front end loaded, meaning you pay commissions upon purchase.

However class a shares have lower ongoing annual fees. Class B shares are back end loaded meaning that you pay a commission if you sell the fund within a certain number of years.

The longer you hold the fund the lower the back end commission. Class B and C shares annual fees can be more than double that of Class A shares. Therefore depending on how long you hold a fund it may be less expensive to pay the up front commission. Regardless of the share class the broker gets paid a commissions when the fund is purchased. Most mutual funds offer commission discounts that depend on the amount of the investment. The investment amounts are called the break points.

Fund families also do not require that the investment be in the same fund.

Unscrupulous brokers maximize their commissions by failing to inform the client of the various methods commissions and expenses can be reduced.

High Yield Bonds bond funds are rated below investment grade and are more susceptible to default. High Yield is attractive sounding but high yield means high risk. Over-concentration occurs when the portfolio is invested in too few securities or asset classes such as bonds stocks real estate cash etc.

These recommendations caused portfolios to become over concentrated in technology stocks. A brokerage firm operates under one name and incurs significant debts, liabilities and lawsuits. When the firm reaches a point they have to liquidate assets to pay their liabilities they close their doors and transfer the assets to a newly created firm with a different name. Both firms will have the same employees and principals.

Forex trading refers to trading in foreign currencies. Investing in foreign currencies is extremely risky. The vast majority of individual investors do not understand it or the risk involved. Further, Forex trading is unregulated. The CFTC warns that anyone making the following statements are trying to defraud you:. With the advent of desktop computers and color printers, it has become relativley easy for Stock Brokers to reproduce account statements.

Annuities command some of the highest commissions and fees available for a broker. Annuities are also expensive to hold or redeem early. The amount of the withdrawal could also have significant tax penalties for early withdrawals. As such these investments are ripe for abuse. The high commissions and fees provide significant incentive for brokers to misrepresent their benefits when recommending annuities to their clients.

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One example is when brokers claim a variable annuity is guaranteed and that the client cannot lose money. However, the broker fails to inform the client that the underlying securities in the annuity are subject to market risk. Options are complicated and extremely risky investments suitable for individuals who understand the enormous risk of options and can afford to lose a significant part of their investment. Margin accounts are a significant source of profits for a brokerage firm.

The client pays commissions on the additional stock purchased in the account as well as interest on borrowed money. Margin also doubles the risk on investments. Accounts can be liquidated if stocks drop in value, even if the drop is temporary.

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This web site is designed for general information only. This firm is not responsible nor does it vouch for the information contained on any links. Site by Purpose Web Design, Clearwater, FL. Guarantees of profits or claims of high performance. These claims and claims like these can be false: Whether the market moves up or down, in the currency market you will make a profit.

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We are out-performing 90 percent of domestic investments. The main advantage of the forex markets is that there is no bear market. We guarantee you will make at least a percent rate of return within two months. Types of Stock Broker Misconduct.

The CFTC warns that anyone making the following statements are trying to defraud you: Home - About Us - Contact Us - Investor Alerts - Investor Rights - Top 10 Investment Scams - Commentary Blog Types of Stock Broker misconduct - State Securities Departments - Arbitration Process - Sitemap - Other Lawyer Resources The hiring of a lawyer is an important decision that should not be based solely upon advertisements.